Resources are efficiently allocated when production occurs at that output at which:
A. P equals MC.
B. P equals MR.
C. P exceeds MR.
D. P equals AVC.
Answer: A
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Suppose Okun's law holds and a one percentage point increase in the unemployment rate reduces real output by 2% of full-employment output
The expectations-augmented Phillips curve is given by ? = ?e - 2.5 (u - 0.04). Suppose ? = 0.08 and ?e = 0.03. (a) What is the natural rate of unemployment? (b) What is the actual rate of unemployment? (c) How much is actual GDP compared with full-employment GDP?
Most wage differences can be understood while maintaining the assumption of equilibrium in the labor market. We deviate from that assumption, however, when we consider
a. the superstar phenomenon. b. the theory of efficiency wages. c. compensating differentials. d. differences in educational attainment.
Give an example of a famous cartel
If Okun's Law holds true, then a 3% increase in GDP would lead to a ________ percentage point decrease in the unemployment rate.
A. 9 B. 6 C. 3 D. 1